Ask what you need to buy a property in Malaysia and most people say 10%. Sean had exactly that for his first purchase, and the bills he had not budgeted for kept arriving one after another.
What else do you actually have to pay when you buy a property?
“It's never 10%.”
Budget well beyond the deposit. Legal fees on both the purchase and the loan, transfer stamp duty, valuation, handover deposits, compulsory insurance and yearly taxes all fall on the buyer, and a subsale costs the most upfront.
Why
Legal fees come with more than one agreement
Developers often advertise a "free SPA", but that covers only the sale agreement. You also pay legal fees on the loan agreement with your bank, and owners of older blocks later pay again when the strata title is issued.
The transfer duty is the big one
Stamp duty on the memorandum of transfer (MOT) is due when ownership passes to you. Sean puts it at up to about 2% of the price, around RM14,000 on a RM700,000 home, and says few developers cover it.
Handover comes with deposits
Before you get the keys, a strata property usually needs about three months of maintenance fees as deposit, plus deposits for water, electricity and telecoms. A subsale also needs an independent valuation, paid by the buyer, before the bank will lend.
Some costs never stop
Banks effectively require mortgage insurance (MRTA or MLTA) before lending, and many require fire insurance too. Every year you also pay quit rent to the state and assessment tax to the local council; in strata buildings these often appear as a jump in the January or February maintenance bill.
What to do
- Plan for upfront cash well above 10% of the price, and more for a subsale.
- Ask the developer in writing exactly which legal fees, and whether the MOT duty, are covered.
- Set aside handover money: about three months of maintenance plus utility deposits.
- Add mortgage and fire insurance to your loan costs, and quit rent and assessment tax to your yearly budget.
- Estimate the legal fees and stamp duty for your price with the purchase cost calculator on this site.
Editorial Note: Summarised from Sean Tan's full episode. The quoted answer is in his own words; the rest is our paraphrase. Figures reflect the recording date, so check current rates and rules before acting on them.
HIDDEN COST WHEN YOU BUY PROPERTY IN MALAYSIA
Sources & Verification Data
Summarised from Sean's English captions for this April 2019 episode. The quoted answer is verbatim; everything else is paraphrased. Fee levels are as Sean described them at the time and have since changed.
